The UK Claimant Count Change measures the change in the number of people claiming unemployment benefits. Along with the Unemployment Rate indicator, which is released at the same time, it provides a snapshot of the UK employment situation and could affect the direction of GDP/USD.
Here are the details and 5 possible outcomes for GBP/USD.
Published on Wednesday at 8:30 GMT.
Indicator Background
Analysts view the data measured by the UK Claimant Count Change as extremely important, as the economy cannot grow without job creation. An indicator reading which is lower than the market forecast is bullish for the pound.
The August release looked very sharp, with 5.7 thousand less unemployed people. The news was especially positive as the markets had forecast as increase of 6.2K additional unemployed persons. However, the market estimate for September stands at a very modest gain of 0.1K. Will the indicator again surprise the markets with a strong reading?
Sentiment and Levels
Stronger UK releases and poor employment data out of the US was the ideal recipe for the pound’s rally last week. The pound has continued to make inroads against the dollar, and has crossed above the important 1.60 line. Speculation over QE is increasing as the US economy continues to under-perform, and this could help the pound extend its gains against the greenback. We could see Bernanke take action as early as this week as the FOMC meets. So, the overall sentiment is bullish on GBP/USD towards this release.
Technical levels from top to bottom: 1.6247, 1.6122, 1.6060, 1.5992, 1.5930, and 1.5805.
5 Scenarios
- Within expectations: -4.0K to 4.0K: In this scenario, GBP/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
- Above expectations: -8.0K to -4.1K: A strong reading would be a welcome positive sign of the health in the British economy, and could send the pair above one resistance level.
- Well above expectations: Below -8.0K: Another sharp drop in employment figures could bolster the pound, and two levels of resistance could be broken.
- Below expectations: 4.1K to 8.0K: A weak reading could push the GBP/USD downward, with one support level at risk.
- Well below expectations: Above 8.0K: A significant loss of jobs will shake confidence in both the UK economy and the pound, and GBP/USD could break two support levels.
For more on the pound, see the GBP/USD.